Foreclosure? Refinance? Impossible? Nah...

By far, the most popular option that foreclosure victims are interested in is refinancing to stop foreclosure. While this is one of the most effective ways to save the home, it can often times be very difficult to qualify for a refinance.

This fact may, surprisingly, come as a surprise to many homeowners in foreclosure. It reflects much of their experience, but is the exact opposite of what many mortgage brokers will tell them. The vast number of homeowners have tried to refinance once, twice, or several times before, but they end up being turned down, with nothing to show for their efforts but higher fees on their current mortgage, and a vast reduction in the time available to stop foreclosure. Also, most brokers will claim to be able to do foreclosure loans, but there are very few direct lenders or hard money lenders who do foreclosure bailouts.

Where the confusion comes from is that when a broker takes the homeowners' loan application to a lender, he is processing the application under his own company's name -- not the direct lender's name. This causes the homeowners to believe that there are literally thousands of potential refinancing options available, and all they have to do is be lucky enough to hit upon the right broker who will accomplish the refinance for them.

What the homeowners do not know, though, is that each broker may take the application and present it to the same direct lender, who turned the loan down before. If a lender turns down a loan once, then they will not consider doing it a few weeks or months down the road, when additional fees, interest, and charges may accrue to the tune of several thousand dollars. Remember: if a lender turns down your loan, and your situation gets worse, and you apply for the same loan through the same lender again, you will get turned down again.

But why don't homeowners know this is happening? The confusion in names is the biggest reason. For example, Broker ABC can submit the foreclosure refinance to Eastern Foreclosure Bailouts, LLC, who will turn the loan down. Broker ABC will tell the clients they have been turned down, and the clients believe they have been rejected by the Broker ABC, so they try another company. The homeowners apply for a loan through Broker XYZ, who takes the application and submits it to Eastern Foreclosure Bailouts, LLC, who turns the loan down again. Broker XYZ tells the client that they are unqualified, and the homeowners think they have been rejected by a second broker. In fact, though, they have been turned down by the same direct lender.

This is the mistake that homeowners make when searching for a foreclosure refinance. There may very well be a lender who will give them a loan, but the homeowners will not be able to narrow down the list of direct lenders to apply to, if they do not know what companies their loan has been sent to in the past.

Having the same loan submitted to the same lenders will only result in the same rejection of the application. Furthermore, submitting the same loan does not stop foreclosure, especially if you have been turned down before. Find out what lenders your brokers have submitted the loans to, so if the loan is not approved, you will know what options are now closed. Then you can use another broker who uses other lenders, or submit your loan directly to lenders yourself.

Remember, you will most likely be better off submitting the loan to lenders on your own, but you will not have the benefit of experience that comes with using a broker. It is up to you, though, to find out as much as you can about the options to stop foreclosure, and what has been done previously to help you.